Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of

return on the market:

Required:

a$.$ What are the betas of the two stocks?

b$.$ What is the expected rate of return on each stock if the two scenarios for the market return are equally likely?

e$.$ What hurdle rate should be used by the management of the aggressive firm for a project with the risk characteristics of the

defensive firm's stock if market return is equally likely to be $7\%$ or $26\%?$ Also, assume a T$-$Bill rate of $5\%.$